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UK foreign secretary Boris Johnson recently announced that the British aid budget will be directed toward projects that promote British interests. The announcement follows a lot of criticism in some media of UK aid spending, which has had a negative effect on public opinion. So how does the UK Department for International Development’s new chief economist think that view can be changed?
“If you look at polls of why people are skeptical of giving aid, it's because they think it doesn't work,” Rachel Glennerster tells me in this week’s podcast. “If you can show that this is really changing people’s lives for the better, then that is a key part of building the case for aid.”
One of the ways that aid is working, she says, is by helping girls stay in school—and family planning plays a key role in that. “You have this really important window in adolescents’ lives when there are all these different decisions that are being made, some of which the adolescent girl has power over, some she doesn’t,” Glennerster says. “This is a critical time for women to invest in their own skills, and having kids in that period can really disrupt that investment.”
Glennerster presented some of her research on family planning at a CGD conference on the topic late last year—you can watch it on the event page. To hear more about what drew Glennerster to DFID and what she plans to bring to the table, check out the clip below.
A consistent theme of President Trump’s campaign and White House tenure is the imperative of ending foreign aid to countries that fail to support America’s policies. These threats were made explicit in advance of the United Nations General Assembly vote on a nonbinding resolution that rebuked the recent US decision to recognize Jerusalem as Israel’s capital. In a cabinet meeting, President Trump said: “this isn’t like it used to be, where they could vote against you and then you pay them hundreds of millions of dollars and nobody knows what they’re doing.” Regardless of whether the administration makes good on this rhetoric, such posturing undermines US credibility and strains its partnerships with other countries.
Since the foreign aid budget and architecture was established to help stem the spread of communism during the Cold War, it has been an instrument of US foreign policy. Studies of US aid and UN voting have found significant connections between the two, although aid-based punishments or rewards are used sparingly and vary depending on regime type, level of development, and trade relationship between the US and recipient country.
Given that US foreign aid has always been linked to national security, how much of a departure is President Trump’s approach from that of previous administrations? And what should we expect to happen to the 128 countries that voted to express “deep regret” over recent decisions on the status of Jerusalem? (Nine countries voted against the resolution, 35 abstained, and 21 were not present for the vote.)
There are at least three ways in which President Trump’s threat is qualitatively different from previous approaches to tying US aid to the diplomatic actions of recipient countries:
The blunt and sweeping nature of the threat. The threat to cut aid to allies and partners was not tied to broader security and foreign policy objectives. While peace between Israelis and Palestinians is a critical US goal, the treatment of this single issue as a litmus test for apparently all forms of foreign assistance to all countries is uniquely broad. Previous aid negotiations have largely occurred around specific issues and targeted leverage; for example, a threat to withdraw aid in the event of a coup or other serious actions that undermine democracy. During the Cold War, the US sometimes traded one-off infrastructure projects for a UN vote or other policy decision (such as cutting ties with Cuba). And US aid to small countries (such as Nauru and Palau) does largely explain their consistent support in UN votes, including this one. Before the contentious vote to include Palestine as a member of UNESCO in 2011, the US exerted diplomatic energy and cut off contributions to UNESCO itself (as required by law), but there were no reports of threats to bilateral aid. The nature of President Trump’s threat also breaks with precedent in the framing of the vote as a personal sign of loyalty or disrespect: US Ambassador to the UN Nikki Haley wrote in a letter to UN Member States “that the President and US take this vote personally.”
The public airing of the threat. The carrot-and-stick negotiations around aid generally take place in private to preserve the broader bilateral relationship. President Trump has embraced an unorthodox approach to foreign policy that combines bold and unpredictable rhetoric with a systematic undercutting of the State Department’s capacity and role. Many USAID posts also continue to go unfilled, weakening the overall US foreign policy toolbox. By making such broad threats publicly while undermining his capacity to act on them, President Trump raises the stakes for his own credibility in future aid and diplomatic negotiations—even if his primary audience was a domestic one. Ironically, the high-profile nature of the threat may have created pressure for countries to abstain or vote for the resolution to avoid the appearance of being too eager to toe the US line.
The lack of a realistic implementation plan. Much foreign aid is congressionally mandated—and it is difficult to imagine movement to end programs combating HIV/AIDS and promoting female empowerment because of this UN General Assembly vote. When President Trump’s FY2018 budget proposed to cut development and humanitarian aid by more than 30 percent, members of Congress expressed strong disapproval. But even if aid levels remain the same, the uncertainty itself hampers planning and frays partnerships. There is also the difficulty of developing and implementing a strategy for the many countries that receive foreign aid among the 128 yes votes, including key strategic allies. Egypt, for example, was a sponsor of the original United Nations Security Council resolution that the US vetoed earlier in the week, paving the way for the UN General Assembly vote Thursday. But as of FY2015, Egypt was one of the top five recipients of US foreign aid at nearly $1.5 billion (with a slight reduction to $1.4 billion in the FY2018 request). Even if it were possible, slashing the aid budgets of critical partners in the Middle East like Egypt and Jordan is counter to President Trump’s stated security, development, and humanitarian interests in the region. Not surprisingly, just after the vote, the State Department’s spokeswoman seemed to walk back the threat, saying that “the president has said yesterday that the UN vote is really not the only factor that the administration would take into consideration in dealing with our foreign relations…”
If past experience is any guide, key security partners will continue to receive development and security aid, while poorer countries may be squeezed a little to show that there are consequences for siding against the United States in multilateral forums. More significantly, as other experts have noted, this rhetoric may be paving the way for major cuts to the US contribution to the UN. This risk is heightened by pressure to cut spending to make up for reduced government revenue as a result of the new tax bill. Whether or not there is follow through on President Trump’s threats to aid, the overall effect of this failed gambit is to erode US credibility and nudge countries to seek more reliable and productive partnerships elsewhere.
I recently delivered a presentation (PowerPoint download) to students in the Master of Public Administration in International Development program at Harvard’s Kennedy School. The purpose of my presentation was to use two cases of IMF-supported program conditionality to animate a discussion of the bridge between first-best policy advice and on-the-ground development policy in country-specific political economy contexts. Having been involved as Minister of Finance in the Liberia case, and as Director of the Fund’s African Department in the Mozambique case, I was able to approach the issue from both an outside- and an inside-the-IMF perspective. Below are the three main conclusions of my presentation.
Country Specifics Matter
The Fund understandably seeks to help achieve first-bests in its member countries through surveillance and policy advice, as well as conditionality agreed with them. And much of this is based on the Fund’s deep expertise on what works and what doesn’t, obtained through its vast cross-country experience. But it is ultimately country-specific circumstances that determine how and when that advice gets played out, or whether it is circumvented.
In Liberia, merging the then-autonomous Bureau of the Budget (BoB) with the Ministry of Finance was drawn out with difficult politics and conditionality for more than two years. The Fund didn’t hesitate to step in as the “heavy weight” in the domestic bargaining around the merger and made the tricky choice of betting on it. The integration was ultimately made possible not simply by virtue of its merits, but also by the confluence of self-interested parties and the overriding search for debt relief. While President Sirleaf undoubtedly had other good reasons for selecting the BoB Director-General as Minister of Finance, it was clearly not simply a matter of coincidence that this decision eased resistance to the merger.
But So Does Transparency
With its undisclosed borrowing, Mozambique deceived its people, its parliament, and the Fund. It blew up the “Mozambique Rising” story and the notion that the country was an example for others. By concealing a large volume of nonconcessional debt, Mozambique circumvented continuous Policy Support Instrument (PSI) conditionality to not exceed the ceiling for contraction of such debt and its Article VIII obligations. In doing so, the authorities rendered the vested interests of defense, security, and state-owned enterprises paramount. Fully owned transparency is clearly a sine qua non for trust and true partnership, which were damaged in their absence.
There has, I’m sure, been more soul-searching in the Fund about the Mozambique case since my departure. An important takeaway from the Mozambique case is that while deeper understanding of vested interests and the political economy context can undoubtedly enhance the Fund’s effectiveness, if countries are deliberately deceptive, the Fund—or any other institution for that matter—can still be blindsided, even after 30 years of deep surveillance, tracked conditionality, multifaceted technical assistance, and on-the-ground presence.
Conditionality and Country Interests Must Align
But the most important takeaway I see from these two episodes is that conditionality is most powerful and effective when aligned with what country authorities most cherish at a particular point in time. Liberia was focused on debt relief and was willing to turn over rocks to achieve it. Convinced that it was “rising,” Mozambique was, for its part, willing to risk deceiving the Fund to satisfy vested interests and address perceived defense/security needs.
*I am grateful to Kelsey Ross for research assistance.
Penny Mordaunt has been confirmed as the UK’s new Secretary of State for International Development. Coming fresh to an agenda can be a major asset, but it can be hard to pick out the things that really matter. As civil servants dust off their detailed briefs, we try to stand back and identify five points that we think are important to understand about the UK’s role in global development on Day 1 in the job.
Development is much more than aid. You’ll be told that to achieve the sustainable development goals (SDGs) will mean a leap in financing from “billions to trillions”—but the pathway to achieving the SDGs is not just aid, nor even just financial. It’s about a whole set of policies, national and international, from increasing trade with the poorest countries to tackling climate change, and from supporting our world-class research and development institutions to tightening up the international tax system.
Migration is, and will continue to be, a major driver of development. As labour moves to areas with higher capital, it increases its ability to produce and earn. Not only do workers contribute to the economy of their new “home,” they usually send money back to their families. These remittances now outweigh aid flows. Targeted aid can help reduce forced migration from conflict, persecution, or disasters, but some pressures from migration are probably irresistible. Even as the Government is committed to reducing net migration, it can promote policies to make existing migration work for development.
Lasting development depends on private finance and taxation. DFID has already positioned itself to help countries catalyse private investment and raise more tax. And there are genuine win-wins, so that investment will benefit the UK and development together. But beware: there are pitfalls. Remember Pergau Dam, where development money was misspent? Mordaunt can commit DFID to a broader vision of global development being in the national interest, and avoid a narrower conception of our commercial or strategic interests.
Overseas aid has a very strong mandate. The commitment to 0.7 percent of GDP on aid was supported by all the main political parties at the 2016 election, and amounts to under £220 per person in the UK per year. It is critical that aid is spent well, and DFID is a world leader in making aid effective. But beware: demanding immediate short-term results can undermine long-term success. And smart people need the flexibility to make adjustments and experiment with new solutions without getting approval from HQ at every turn. Mordaunt must be prepared to take risks and withstand attacks from ideological opponents of international development. Some failure is unavoidable in the world’s poorest contexts.
Many friends of DFID say that the UK has stepped back from its leadership role on global development and humanitarian assistance. Though the UK has world-class NGOs, some of the best university research, and strong political support for aid from the main political parties, it is up to the Government to lead on bold new initiatives. Despite its commitments to a global Britain, the UK is perceived by the US, European partners, and others to have given up its leadership role. China and other emerging market economies are poised to become dominant players through their support of “South-South” development. There are excellent UK initiatives like the Smart Rules on better aid programmes, and a push improvements to the multilateral system including on humanitarian response. These have wider relevance to all development actors but will need Mordaunt’s support. The UK can and should step forward, not back, in shaping and bringing new ideas to the development discussion.
The new Secretary of State, who will be supported by a new Permanent Secretary, has a strong platform on which to build. Mordaunt can make the most of DFID and the UK’s strong reputation abroad, making the case to the British public and international partners that effective development is important to the UK’s future in its own right.
DFID is not merely an aid department: it should also be a development ministry, working effectively with and across government, and with international partners, to support policies and programmes that accelerate the realisation of a more peaceful, prosperous, and sustainable world.
Germans have given Chancellor Angela Merkel a fourth term as chancellor, but once again without a parliamentary majority. It seems likely that Merkel will now try to negotiate a black-green-yellow “Jamaica coalition” (referring to the parties’ colors) with the Greens and the pro-business Liberals replacing the Social Democrats as coalition partners. Despite the gain in vote for nationalists, our analysis suggests the Jamaica coalition could actually strengthen Germany’s role in accelerating global development, as well as benefitting Germany.
In this blog, we look at the what the Jamaica coalition means using the framework of our Commitment to Development Index—which ranks rich countries on aid, migration, technology, environment, trade, finance, and security.
Germany’s starting point on Commitment to Development
Overall, Germany ranked fifth (out of 27 countries that we assess) and first on migration, largely because it has accepted so many refugees in recent years. We counted migrants as “1” when they came from the poorest country (Democratic Republic of Congo) and “0” when coming from the richest country (Norway). This method quantified that Germany lifted the equivalent of “880,000 poverty weighted migrants” out of extreme poverty last year! But a ratio of one new migrant for every 92 Germans, contributed to the rise of the far right nationalists (AfD) who have become the third largest party in parliament. Regardless of the election results, mounting public pressure will reduce migration. But a poll of economists thinks the Jamaica coalition is actually more migration-friendly than a continuation of the previous grand coalition would have been.
On aid, Germany met the international commitment of 0.7 percent of national income (GNI) on aid (overseas development assistance) for the first time in 2016. This included high expenditure on hosting refugees—but to maintain 0.7 when fewer refugees arrive, overseas development assistance would have to ramp up quickly.
On environmental policies, high emissions per capita mean Germany might not meet the Paris agreement commitment to reduce emissions by 40 percent by 2020. The global poor will suffer the consequences: climate change might push 100 million people back into poverty by 2030. This is partly due to Germany’s poor policy choices, like burning and subsidising fossil fuels. Both the Greens and Liberals want to phase out these subsidies.
On technology more widely, there has been an increase in overall R&D spending to 0.88 per cent of GDP, but this is still lower than in many other countries. Spending more to create new technologies like mobile phones or biometric IDs can transform development and is a perfect example of investing in global public goods. All major parties want to increase R&D spending to 3.5 per cent of GDP by 2025—a “Jamaica coalition” will not change anything significantly here but this is a positive direction for development.
Germany’s trade policies have a significant impact on developing countries. Free trade agreements such as the EU’s “everything but arms” initiative give poor countries tariff-free access and have the potential to dramatically reduce poverty. For instance, a recent natural experiment suggests trade deals such as these can lower infant mortality by about 9 per cent.
On security policy, Germany has been criticized by the US for failing to spend 2 per cent of GDP on defence. This figure includes spending on UN peacekeeping, for which Germany spends only 0.03 per cent of GDP—less than the OECD average, and this at a time when the UN peacekeeping budget is facing deep cuts. This is a matter of real concern because security and development are closely interlinked—for instance, one study suggests that civil wars decrease GDP per capita by 17.5 percent. Merkel’s conservatives want to double defence spending to reach 2 percent of GDP by 2024. The Liberals also want to increase defence spending, unlike the Greens, who want to specifically focus on increasing support for UN peacekeeping.
Overall then, taking the policy commitments of the Liberals and Greens and adding them to Merkel’s conservative bloc in a “Jamaica coalition” could bode well both for Germany, and development beyond aid.
Effectiveness sounds dull. But what if an extra dollar or rupee in a budget could feed ten people instead of one? Or if $100,000 of international aid spending could be tweaked so it would save ten times as many lives? When the stakes are this high, efficiency in spending becomes a moral imperative. Moreover, unlike debates over ideology or religion, debates over efficiency can actually get somewhere, because there is a straightforward mechanism for resolving them: compare the predictable costs and benefits of different courses of action and see which yields more bang for the buck.
With plans for a redesign of the State Department and United States Agency for International Development well under way, this is a critical moment for an informed discussion of the latest reforms proposals that will make US foreign assistance more effective and efficient. Please join us for a bipartisan debate featuring authors of four recent reports that outline options for reform and reorganization of US global development functions. The event will bring to light key areas of consensus and divergence among experts, and will aim to highlight emerging organizing principles for the future of US foreign assistance, potential structural changes to the US global development architecture, and opportunities for building momentum in a fluid political and legislative environment.